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Pay-TV, Broadband Subs Moving in Opposite Directions

by MarketingCharts staff
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Although the second quarter is traditionally a soft one for pay-TV providers, their net loss of subscribers was higher this year than last (325,510). LRG’s figures are similar to those recently issued by IHS, which estimated that pay-TV providers lost 352,000 subscribers during the second quarter en route to the market’s first ever net loss of subscribers during the first half of a year.

While pay-TV subscriber losses accelerate, the opposite is true for broadband subscriptions. In the second quarter, LRG estimates that net broadband additions were 16% greater than in the same period last year.

The opposing trends are most pronounced for cable companies. Among the top cable companies, for example, Comcast lost 159,000 pay-TV subscribers, while gaining 187,000 broadband subscriptions. Time Warner similarly shed 189,000 pay-TV subscribers, while posting a net add of 21,000 broadband subscriptions.

Increasing broadband proliferation and decreasing pay-TV penetration may well be linked. According to recent research from Fiber to the Home Council Americas, only 1 in 3 under-35 broadband subscribers in the US and Canada get all their TV the traditional way. In fact, roughly 1 in 8 solely rely on over-the-top (OTT) services such as Netflix and Hulu to watch TV content, eschewing traditional TV entirely. Similar research from pivot suggests that a sizable group of young broadband subscribers who both stream and watch pay-TV intend to cut the cord and rely solely on OTT options.

A growing number of consumers also appear headed to fall into the “cord-never” bucket: a new study from The Diffusion Group (TDG) suggests that 18-24-year-olds living with their parents are far more likely to be inclined to sign up for an OTT service than a pay-TV service when they strike out on their own.

If that proves to be the case, the trends illustrated by LRG’s data are likely to continue.